Interbank Rates Drop Significantly as CRR Credit of c.N200bn Hits Banks

Proshare

Friday, March 06, 2020 / 06:23 PM / By Zedcrest Capital / Header Image Credit: Tribune Online

 

 

Below are highlights of trading activities in the fixed income and forex market on March 06, 2020

 

 

FGN Bonds

The Bonds Market traded on a quiet note, with its bearish course still maintained, as offers improved across the bond curve. With the mid-term review of the 2020 budget in view and The Nigerian Senate's approval for the borrowing of $22.7bn for infrastructure projects, there's a sentimental concern among local investors, as we continued to see slight sell pressure on the long-end of the curve (2049s). Yields expanded by an average of c.74bps across the benchmark bond curve.



We expect the quiet sentiment to persist next week, as investors remain sidelined in a bid to understand market direction.



Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

7.35

5.88

0.91

 

16.39 27-Jan-22

9.14

5.35

1.99

 

12.75 27-Apr-23

9.99

8.07

0.47

 

14.20 14-Mar-24

10.40

9.89

1.21

 

13.53 23-Mar-25

10.16

7.69

0.70

 

12.50 22-Jan-26

10.80

10.08

0.61

 

16.29 17-Mar-27

11.62

10.58

0.55

 

13.98 23-Feb-28

11.62

10.58

0.62

 

12.15 18-Jul-34

11.85

11.08

0.63

 

12.40 18-Mar-36

11.97

11.24

0.66

 

16.2499 18-Apr-37

11.52

11.00

0.31

 


14.80 26-Apr-49

12.60

12.54

0.27

 

1

 


Treasury Bills

Similarly, the Treasury Bills market traded on a bearish note, as noticed all week, with better offers seen across the OMO curve despite a CRR credit of c.N200bn. The 362-DTM (02-Mar) issued at yesterday's OMO auction had the most axes but little activity, with a widened bid/offer spread of more than 60bps. At the tail-end of the market, we saw slight sell-off at the long-end by mostly Foreign Portfolio Investors as yields peaked at above 13.00% levels. Yields expanded by an average of c.58bps across the benchmark OMO curve.


The NTB side continued its bearish trend into the last trading of the week, as we continued to see better offers at the short- to mid-end of the NTB curve, as most offshore investors switch from NTBs to OMO bills. Yields expanded by c.142bps across the benchmark NTB curve.


We anticipate more bearish sentiment going into next week for OMO bills, as we expect offshore investors to continue selling. We also anticipate a quiet session (next week) for local investors, as attention shifts to the T-bills PMA.


Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 19-Mar-20

13.50

9.20

1.00

NGOMO 2-Apr-20

13.25

9.00

0.75

NGOMO 14-May-20

13.00

10.35

0.50

NGOMO 4-Jun-20

13.00

9.00

0.30

NGOMO 2-Jul-20

13.25

9.50

0.75

NGOMO 13-Aug-20

12.50

11.00

(0.20)

NGOMO 3-Sep-20

13.25

11.00

0.75

NGOMO 1-Oct-20

13.20

12.00

0.50

NGOMO 3-Nov-20

13.10

11.00

0.60

NGOMO 1-Dec-20

13.25

11.75

0.55

NGOMO 5-Jan-21

13.50

12.90

0.80

NGOMO 02-Feb-21

13.40

11.00

0.70

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Apr-20

5.00

1.00

0.00

NIGTB 2-Jul-20

6.00

1.00

1.00

NIGTB 1-Oct-20

8.00

1.00

3.00

NIGTB 14-Jan-21

8.00

2.00

2.50

NIGTB 11-Feb-21

8.00

3.60

1.50

                                                                         


Money Market

The Interbank market saw some little respite, as CRR Credit of c.N200bn flowed into banks, causing a c.280bps drop in interbank rates.  OBB and OVN rates closed the week lower at 11.71% and 15.64% respectively, as published system liquidity opened with c.N295.64bn positive.


 

We expect rates to slightly inch up next week, with FX Wholesale and Retail debits expected, which dwarfs the c.54bps inflows from OMO maturities later next week.


 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

11.71

14.57

Overnight (O/N)

12.86

15.64

 


FX Market

At the Interbank, the Naira/USD spot rate and SMIS rate remained unchanged to close at N307.00/$ and N358.51/$ respectively to close the week. The Naira appreciated at the I&E FX window, losing 32k to close at N366.25/$.


The parallel market, the cash and transfer rates remained unchanged at N358.30/$ and N368.00/$ respectively.


FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

307.00

307.00

CBN SMIS

358.51

358.51

I&E FX Window

366.25

366.57

Cash Market

358.50

358.50

Transfer Market

368.00

368.00


 

Eurobond

The NGERIA Sovereign tickers ended the week on a bearish trend, as offers continued to improve across the sovereign yield curve. With crude oil prices plunging further by c.8.87% D/D due to OPEC failing to agree with allies on how much production is to be cut amidst the Coronavirus outbreak. Yields expanded by c.27bps across the sovereign yield curve.


The NGERIA Corps tickers traded on a mixed note, as yields on the SEPLLN 2023s and ETINL 2024s weakened by c.22bps and c.19bps respectively, fueled by dwindling crude oil prices. While the ACCESS 2021s continued to strengthen by c.2bp among most tracked papers.



 Proshare Nigeria Pvt. Ltd.

 



Proshare Nigeria Pvt. Ltd.

 

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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